Movie Theater Operator Readies for Earnings

There's plenty of room for a short squeeze

Deputy Editor
Nov 2, 2023 at 1:18 PM
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Shares of the Cinemark Holdings Inc (NYSE:CNK) are flat this afternoon, last seen up 0.2% at $16.60, ahead of the company's third-quarter earnings call. The movie theater is set to enter the earnings confessional before the open tomorrow, Nov. 3, and analysts expect earnings of 42 cents per share on revenue of $847.283 million.

Taking a look at Cinemark stock's recent earnings history, the stock was higher after five of its past eight post-earnings sessions, including a 9.4% pop after this same quarter a year ago. In these last two years, CNK averaged a swing of 4.6% after earnings, regardless of direction. This time around, the options market is pricing in a much larger move of 9.2%. 

The stock could use the extra bump too, as its 40-day moving average keeps a keeps a lid on its v-shaped formation on the charts. Though Cinemark stock is down 9.5% this quarter, it still maintains a 92% year-to-date lead.

CNK November 22023

This penchant for puts is quite the turnaround, as 17.07 calls have been bought for every put in the last 10 days at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than 95% of its annual readings, suggesting calls are being picked up at a faster pace than usual.

There's ample room for a short squeeze. Short interest is off by 7.3% in the two most recent reporting periods, yet the 22.54 million shares sold short represent 20.7% of the stock's available float. It would take shorts nearly nine trading days to cover their bets, at CNK's average pace of trading.

 

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